Pros and Cons of gift cards

Gift cards

For many, a gift card is a perfect gift. Finding the perfect present for a loved one can be challenging, especially if unsure of what the receiver likes. Gift cards also eliminate the risk of one getting the same present from different people. With a gift card, he/she can decide on what to get from the specific store or merchant. The best thing about this is that one can combine multiple gift cards to get one present that means a lot to them. These are some of the reasons consumers buy gift cards ahead of the holiday season or any other special event. E-gift cards are also gaining traction as well.

Like everything else, there are two sides to a gift card. Outlined below are the pros and cons of gift cards from both the customer and business perspectives.

Pros of Gift Cards

The advantages of gift cards vary from one person or entity to the other.

The advantages of gift card selling and giving are undoubtedly different for the buyer and the seller. Let’s start with how gift cards are beneficial for businesses.


The COVID-19 pandemic forced everyone to have a different perspective on life and everything else. With lockdowns and fear of spreading the virus, many consumers turned to e-cards as an alternative to sending gifts directly to friends and loved ones. Businesses that had incorporated gift cards in their systems thus saw a boom in business. Here are some of the ways businesses benefit if you buy gift cards:

i.          Increased Brand Awareness

Gift cards can be described as a business’ best ambassador. Companies are known to produce a wide range of gift cards, each suiting a specific occasion or need. They then use these cards to promote and market their businesses both online and offline. With the card carrying the company’s name and branding, this is one of the most effective word-of-mouth advertisements modern companies use to boost brand awareness.

ii.          Improves Customer Loyalty

Pairing gift cards with a loyalty program makes your business more appealing to target, potential, and loyal customers. This strategy gives customers vast shopping options and almost irresistible, personalized deals. The fact that each gift card accumulates redeemable points at the store improves brand credibility and customer retention and makes it easier to remember.

iii.         Higher AOV (Average Order Value)

According to research, most people shop for more than their voucher or gift card is valued for. It is quite common for customers to top up their gift cards with cash. This thus translates to even more sales and profits on the business end. Many customers will gladly top up the difference in cash compared to if they were to pay for the entire shopping out of pocket.

iv.        Makes Handling Returns Easier

Returns are inevitable. There are times when a customer will not be satisfied with a product and request for a refund. Returns become much easier to handle, especially if the customer shopped with their gift card. A smooth return handling policy eliminates the risk of poor ratings and improves customer satisfaction.

v.         Positive Brand Perception

Non-cash rewards are a common occurrence in the corporate sector and are quite effective than cash rewards. Most employees feel valued when offered a gift card, and so are customers. Many companies use this rewards program as a way to boost their brand.

vi.        Higher Post-Holiday Sales

Many companies record poor sales as soon as the holiday season is over. Although profits made during the holiday season may help cushion the business for some time, no one can predict the future. Nevertheless, there’s a good chance those gifted with gift cards will want to redeem the cards and probably spend even more than the card’s value. In addition to this, most people redeeming the cards won’t come alone but will have a friend or family member tag along. This increases the chances of them purchasing at your store.

vii.        Manage Foot traffic

Gift cards are even more effective and beneficial when you have more than one store in different locations. The first thing anyone will do after getting a gift card is look it up online. The customer may thus decide to shop at one of your satellite shops, boosting foot traffic to the same. Including discounts for cards redeemed at specific stores can also help increase brand performance and sales to the particular store.

Benefits of gift cards to the customer

Customers are said to be the biggest beneficiaries of gift cards. Here’s why:

i.          Gift Cards Are a Convenient and Easy Purchase

In the modern world, gift cards are the most thoughtful presents anyone can think of. In Canada, for example, most shoppers prefer to buy a gift card for their friends instead of getting them a specific item. This makes gifting easier as you don’t need to wrack your brain over what present to get him/her. The gift card makes it easier for them (the receiver) to determine what present to buy.

ii.          Controlled Spending

Hunting for a unique present can be particularly overwhelming during the holidays. Some of the presents may cost more than you intended to spend in the first place. Buying a gift card instead, however, allows you to spend within your limit, safeguarding your wallet in the long run.

iii.         No Time Restrictions

Most gift cards do not have a time restriction – most of them remain valid for up to 5 years or even more. That said, you do not have to waste time sifting through different products/items in search of the perfect gift. Gift cards save you time and effort; all you need is to walk to the store and buy the gift card. You can even buy the gift card via their online portal – more convenient.

iv.        Cost-Effective Delivery

Shipping fees are almost unavoidable when shopping online. Shipping fees, however, depend on the type and weight of the item and where you wish for the same to be shipped. No shopping fees are required when buying a gift card. This is because you can have the gift card emailed to you, allowing you to print the voucher at home.

v.         Discounts

Discount vouchers have been around for many years. You can enjoy discounts of as much as 10% of the gift card’s spending. You only need to buy gift cards from certified retailers and outlets to avoid scams and fraud.

vi.        Guilt-Free Spending

Most people feel guilty about spending lots of money on themselves. A gift card eliminates this altogether, making it possible for one to appreciate themselves guilt-free.

Cons of gift card for businesses

i.          Risk of Fraud

There is an increased risk of scammers targeting your customers. This, again, makes your business more vulnerable to damaging chargebacks. Your reputation can suffer as a result.

ii.          Possible Tech Issues

This is quite rampant with e-gift cards. Without a well-written and solid code, your systems might face downtimes, fatal errors, and delays, which could be costly to you and the customer.

iii.         Extra Expenses

Integrating the e-gift card software into an existing system may require additional computing power. Your staff might also need to be trained to be able to use the system.

Disadvantages of gift cards for the customer

i.          E-Gift Can Be Lost Easily

Digital assets, like physical ones, can be misplaced or lost without a trace. This is usually the case where the card/voucher wasn’t registered. This is one of the reasons most companies prefer registering their gift cards for easier recovery.

ii.          It cannot Be Personalized

This can be both a blessing and a curse. Personalized gifts are mostly preferred as they add sentimental value. Unfortunately, gift cards can not be personalized unless the receiver chooses to add customized messages on the items they buy with the card. Nevertheless, gift cards are the perfect option if you wish to remain unknown.

iii.         Expiration

Some vouchers have an expiration date. Should one forget to redeem their voucher, they cannot redeem or get the amount back.

iv.        Extra Fees

Some gift cards attract an activation fee. This can be discouraging, especially when one has to pay an amount to access their present.

v.         Store-Specific

Some gift cards are store-specific. This means one can only redeem the card at that particular store, which can be a hassle for some.

vi.        Gift Cards Are Non-Refundable

Most cards and companies do not offer money-back guarantees. This means you must redeem the gift card or risk losing money.

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